Britain's escape from recession was stronger than previously thought in the final three months of last year, as the services sector bounced back.

The economy grew by 0.3% in the fourth quarter, rather than 0.1% as previously estimated, the Office for National Statistics said this morning. This marked the first time the economy had grown since the first quarter of 2008, when the UK's deepest and longest postwar recession on record began.

But City economists, who had pencilled in 0.2% growth, said the figures did not change the overall economic picture, which remains weak. Some warned that the economy could slip back into recession in the first three months of this year.

"Certainly a pleasant surprise for ­everybody," said Marc Ostwald at Monument Securities. "Does it really fundamentally change anything in terms of the outlook for the economy? Not really. At the end of the day it's not an indication that it is going to be anything durable. The pick up in manufacturing probably owes as much to restocking as anything else, and that may also be the case for services."

The ONS revised growth in the dominant service sector higher to 0.5% from 0.1%, marking the fastest growth since the start of 2008 and following a 0.3% drop in the third quarter. The rebound was fuelled by strong growth in computer, legal and accountancy services, while banking and other financial services stayed weak and government services were flat.

Household spending also recovered at the fastest pace since early 2008, with a 0.4% increase.

Manufacturing expanded by 0.8% in the fourth quarter. Overall, the production industries, including mining and utilities, grew by 0.4% following a 1% fall in the previous quarter.

Adam Chester at Lloyds TSB Corporate Markets said: "A sigh of relief that actually we have indeed pulled out of recession in the fourth quarter. But I don't think we are out of the woods. The first quarter is now going to be the focus and given the weak January we have had and the bad weather, there is still a distinct possibility that we could dip back into the red in the first three months."

A collapse in business investment in the fourth quarter yesterday sparked fresh talk of a possible double-dip recession and a sterling crisis in the run-up to the election. Jim Rogers, one of the world's leading financiers, warned the pound could plummet within weeks and described it as a potential "basket case".

The Treasury was guarded in its assessment of today's GDP figures. "While it is welcome to see an upward revision, recent data in the European Union and elsewhere has indicated that there are risks and uncertainties to this recovery, and there is no room for complacency," said a Treasury spokesman. "Withdrawing support that has helped us get to this point would put the recovery at risk."

Alistair Darling warned today that spending cuts and wage curbs will be inevitable, although he also cautioned against premature action that could choke off the nascent economic recovery. The chancellor said Britain faces much tighter public spending after the election. The issue is "when and how fast".

"I make no bones about it," he told the Irish Times. "There are going to be some difficult decisions taken – public spending is going to be tighter. That is on the back of public spending having more or less ­doubled over the last 10 years."

He added: "There will be things that will be cut, things that will be postponed. It is said that in the public sector wage increases will be held a lot lower than they have in the past. If we don't back down on our borrowing, then you will simply end up spending money on servicing debt instead of spending on things that people would probably like to have monies spent on."

He cautioned, however, against acting too soon. "Until you have got recovery established – in the absence of private sector investment coming back – if you start to reduce your spending too soon, then the risk is you derail the recovery and tip us back into recession," he said.

Danny Gabay at Fathom Financial Consulting noted that the third-quarter GDP number was revised lower to a fall of 0.3% and together with other back revisions this left the level of GDP a little lower than expected last year, despite the better fourth-quarter outturn. "That will come as a surprise to the Bank of England," he said. "So, while the news on the fourth quarter is welcome, we would hold off on the champagne for now."